By Alex C
Agusto & Co., a pan-African rating agency and research firm, has revealed that the power, automobile, real estate, dairy and poultry sectors are key drivers of economic growth and job creation over the next decade.
In its 2014 industry report, the pan-African rating firm highlighted numerous challenges facing various sectors of the economy and investment opportunities. The research firm said there were vast opportunities in the power sector for intending investors, given the wide demand – supply gap and the country’s market size.
According to the report, “As of March 2014, electricity supply from the national grid stood at 4,306 megawatts (MW), far below the estimated demand of 12,800MW. This implies that currently, Nigeria is only generating about 34 per cent of the country’s requirements, and this provides an enormous potential for new and existing players in the Industry.
“The demand for electricity in Nigeria has been upheld by strong economic growth and increasing urbanisation. With annual economic growth estimated between seven per cent and 13 per cent, as well as urbanisation rate of 3.8 per cent, electricity demand in Nigeria is projected at 15,730MW, 41,133MW and 88,282MW by 2014, 2015 and 2020, respectively.”
The report pointed out that the poultry industry, a sub-segment under the agriculture sector had recorded an average annual growth of about six per cent both in chicken (broiler) meat and hen/egg production since 2007.
“The size of Nigeria’s poultry industry was estimated to have reached 373.03bn in 2013. Domestic rural production of poultry accounts for the bulk of the industry at about 85 per cent with the balance attributable to local commercial poultry production and illegal imports of frozen poultry products,” the report added.
The report also showed that returns on investment for property developers in the Lagos real estate market remained attractive.
“Our research showed that income from sales of properties account for up to 80 per cent of revenue, followed by rental income, which accounts for up to 18 per cent. Property developers may also earn some income from management fees. The key cost components include land acquisition, construction (driven by cost of building materials) and marketing/agency costs. Land acquisition is the single largest cost component, accounting for an estimated 50 per cent (up to 60 per cent in the prime markets) of total property costs,” the report identified.
On the dairy industry, it stated that the dependence on imported raw milk powders would continue to expose industry operators to volatility in global milk prices and considerable exchange rate risks – particularly in an era of declining reserves.